Origin to Buy Swift Fields (Folo) China National and Shell to Expand Work BUSINESS ASIA By Bloomberg

Origin Energy, the second-biggest power retailer in Australia, and Contact Energy agreed to buy New Zealand oil and gas fields from Swift Energy for $87.8 million to gain from rising demand and prices.

Origin and its New Zealand unit, Contact, will acquire seven fields in the Taranaki region, along with pipelines and the Rimu and Waihapa gas treatment stations, the companies said in a statement. Under a separate agreement with Origin, Contact will pay 54 million New Zealand dollars, or $41 million, for the Ahuroa field for redevelopment as a gas storage reservoir.

Origin is expanding its gas holdings in New Zealand, where delays developing new fields and rising demand are increasing power prices. It is already the biggest holder of exploration acreage in the country and is developing the offshore Kupe gas field in south Taranaki, near Swift’s Rimu production station.

The “assets are an attractive mix of mature, producing fields with prospects for in-fill drilling and potential oil and gas upside,” Origin’s managing director, Grant King, said in the statement. They offer “immediate production and earnings” as well as operating synergies for the Kupe project, he said.

Contact, half owned by Origin, runs two of the five largest gas- fired power stations in the nation. It is building geothermal plant and wind farms to avoid the rising cost of new fuel supplies.

Developing Swift’s Ahuroa field as an underground gas store will restore flexibility lost in the company’s newest fuel contracts and enable the firm to hold gas when other, cheaper generation is available, Contact’s chief executive officer, David Baldwin, said.

About half the purchase cost is for 7 petajoules of gas still contained in the field that will form a “pad” to receive injected fuel, Baldwin said. “Working volumes over and above that pad could be 10 to 20 petajoules,” he said.

The project is likely to cost 150 million dollars during the next two years, including installing compressors and additional drilling, according to a presentation on Contact’s Web site. The facility may start operating by mid-2010.

Swift, based in Houston, has operated in New Zealand since 1999. It sought bidders or partners for the unit in May, citing declining production and a lack of investor recognition for the reserves there.

The New Zealand fields produced the equivalent of 6.5 billion cubic feet, or 184 million cubic meters, of gas in the nine months ended Sept. 30, about 12 percent of Swift’s total in the period, the company reported Nov. 1.

Originally published by Bloomberg News.

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